27

Role and Responsibilities of Managerial

Economists: Empowering Business through
Methodology and Strategy
V. Basil Hans *

Abstract
An appreciation of economics and the general workings of the economy have become
increasingly necessary to make sense of government policy-making, the conduct of
businesses and the enormous changes in economic systems, which are occurring
throughout the world. With the increasing importance of behavioural economics, for
business and management, especially with the recent global downturn, managers need
to be effectively equipped with economic theories, tools and techniques. Their expertise,
efficiency and experience, then will enable them to manage any crisis, adequately.
Both theoretically and practically, it is a bridge-building exercise between business and
economics. The excellence that managers attain will be rewarding to them and the
business environment. This paper highlights how modern manager ought to be a
strategist and an economist in terms of her role, responsibilities and qualities.It analyses
the emerging parametric convergence between economics and business. It calls
forincentivising smart people to engage more in productive rather than unproductive
entrepreneurship. The intent is to make way for empowering business, with both firm
and market advantages.
Keywords: Business, corporations, economics, managers, responsibilities, strategy

“No matter how high you climb the ladder, hard work is necessary for
success” (Anon).

INTRODUCTION
In the knowledge-based economy and business, those who continued to
have expertise in economics are referred to as managerial economists,
economic advisors, or company economists. The study of the role and
responsibilities of managerial economists brings to light the practical
importance of managerial economics itself.
As we know, managerial economics is economic theory in practice. A
managerial economist helps the management by using his analytical skills
and highly developed techniques in solving complex issues of successful
decision-making and future advanced planning. A managerial economist

* Department of Economics, St Aloysius Evening College, Mangaluru, Karnataka State, India

email : vhans2011@gmail.com
 Role and Responsibilities of Managerial Economists:
28 Empowering Business through Methodology and Strategy

can play a very important role by assisting the management in using the
increasingly specialized skills and sophisticated techniques, which are
required to solve the difficult problems of successful decision making
and forward planning. That is why, in business concerns, her importance
is being increasingly recognised.
It is critical to recognise that companies operate not only within markets,
but also within a society. Organizational and operational functions are
no longer confined to a stakeholder model that considers power
relationships between the corporation and other entities. New models
try to explain how to give power to the powerless by replacing force
with ethical duty (Steiner & Steiner, 2013).Case studies of various
business Organizations reveal that despite dynamic business environment,
many complicated issues crop up about management. Companies fail if
they lack of proper Organizational structure with clear roles and
responsibilities prior to implementation of new strategies and this should
be part of corporate governance (Krishna, 2014).
A fusion between commerce and economics should not be undermined.
Time has also come for research acumen to be integrated with business
agility. New concepts, constructs and practices such as ubiquitous
commerce (u-commerce): combination of traditional e-commerce and
wireless, television, voice and silent commerce; enterprise resource
planning; social entrepreneurship; and social market economy have
emerged. The ‘management’ side of economics is coming up.
However, management as ‘art’ and not merely as ‘science’ has to be
recognised.1Economics – the “queen of social sciences” can help do that.
While commerce research is applied in nature, it can gain a lot by building
bridges with Applied Economics. Such a relationship would help build
the base for business trade, industry and trade, and development. It helps
solve problems, expand the human knowledge and develop better and
advanced tools and techniques for development even in a complex, ever-
changing and challenging environment with new designs. This is not
simply a game theory, but a “reverse game theory” (Hans, 2011; Hans &
Jayasheela, 2013).

Vol 10 Issue 2 December, Year 2016 Nitte Management Review

V. Basil Hans 29

MANAGER AND MANAGERIAL ECONOMICS

Economic Theory
A theory is a well-substantiated explanation of some aspect of the natural
world and an organized system of accepted knowledge that applies in a
variety of circumstances to explain a specific set of phenomena. Theories
can incorporate facts and laws and tested hypotheses. That makes us to
endorse a phenomenon as “true in fact and theory”.
Economics is theoretical. It is a treasure house of theories, models and
scientific laws. It is said that economics is model-building science. In
Economics, we have Price theory, Consumption theory, Monetary theory,
Distribution theory, Growth theory, Demographic theories, Population
theory, Business Cycle theory and so on. Broadly as per the distinct
approach or method in economics, we have microeconomic theory and
macroeconomic theory.
Of what avail, is economic theory? One obvious answer is that it is a
challenging intellectual enterprise and interesting on its own merits. A
well-constructed economic model has an aesthetic appeal like a piece of
music or a painting or a poem: an intellectual pursuit. Secondly, it plays
an essential part in economic research and policy-making. It means,
economics is a policy science, says Hal R. Varian (University of California
at Berkeley). In the policy domain, the importance of economics can be
highlighted as below:
• Describing the structure and status (success/failure) of an existing
policy
• Defending and existing practice – (a) theory as a substitute for data,
(b) theory tells what parameters are important and how we might
measure them. For example, the Laffer curve depicts the relationship
between tax rates and tax revenue.2
• Demonstrating/determining benefits and costs – required for making
rational choices (optimisation); and to move from individual
objectives, to individual choice, to social objectives and social
choice.
 Role and Responsibilities of Managerial Economists:
30 Empowering Business through Methodology and Strategy

• Directing towards remedial steps even for seemingly disparate

problems as for example, the Arrow-Debreu general equilibrium
model: the concept of ‘good’ can be interpreted as a physical
commodity available at different times, locations, or states of nature.
One theoretical model can thereby provide a model of inter-temporal
trade, location, and uncertainty.
• Developing new insights/avenues even though it may be a wrong
theory – pure competition is certainly a ‘wrong’ theory for many
markets; pure monopoly is a wrong theory for other markets.
Nevertheless, each of these theories can be very useful for yielding
significant insights for how a particular market functions. No theory
in economics is ever exactly true.
Thus, basically economic theories seek to predict and explain economic
behaviour beginning with a model, such as the profit-maximisation model
(Salvatore, 2017). The methodology followed being logical ensures a
choice: accept or reject the theory or model, if it predicts accurately.3With
more and more econometric paths being adopted an economist is indeed
a technician even while knowing the truth of the market.

MANAGEMENT
Weihrich et.al (2011) define management as “the process of designing
and maintaining an environment in which individuals working together
in groups efficiently accomplish selected aims.” Management is
concerned with productivity be it in a company, church, school or a State.
Management as an art or science is as old as economics. The ancient
Greeks defined economics as the “art of household management”. Here,
the household could be micro unit (individual person or family) or the
macro entity (state, for instance). Today we consider that the global
economy – the earth, its resources and the activities in the world using
the world’s resources) – needs to be managed effectively. That is why
essentially business economics is the integration of business and
economics through management – the meeting point or common ground.

Vol 10 Issue 2 December, Year 2016 Nitte Management Review

V. Basil Hans 31

Old school management tools are being sharpened and new school
management tools are being devised to deal with innovative and dynamic
practices and approaches to empowerment evaluation, service leadership,
diversity management, integrated performance management, and
reengineering corporate management. Analysing and applying
management (not Organization perse) concepts and tools (e.g. Plan
Quality Index)4 critically to contemporary and changing business
situations is one of the specialism today (e.g. Critical Theory of the
Frankfurt School5).

MANAGERIAL THEORY
Managerial theory is the theory of the firm or theory of the enterprise.
Theories of the firm are ways of conceptualising the firm. Theory of the
firm helps us understand why firm exists and why it does what it
does.6Coase’s transaction cost theory was one of the first neo-classical
attempts to define the firm theoretically in relation to the market. He
argued that transaction costs i.e. costs not reflected in the price
mechanism, explain both the existence of firms and their optimal size.
Critics however argue that transaction costs would be minimised in a
world without transactions, if for instance rights and duties would initially
be assigned in the ‘right’ way. This leads us to the theory of property
rights. In 1995 Oliver Hart, one of the leading scholars in this area, wrote
that a firm without property is just a phantom. In situations where ordinary
contractual relationships fail, firms arise and the ownership of capital
assets puts (collection of) persons in the position to organise production
through the purchase of economic factors, including labour.7Labourer in
this sense is not abstract, even if his work is. Applied to corporate
governance, this theory provides a supplement to contract theories.
Contracts make economic relationships ‘legal’ and bring economics closer
to jurisprudence (Hans, 2017).
Coase’s theory was later extended by Williamson8through a deeper
analysis of different forms of contracts. He developed ‘governance’
structures which can be seen as a spectrum of contracts between the
extremes of markets and firms. Alchian and Demsetz’s analysis of team
 Role and Responsibilities of Managerial Economists:
32 Empowering Business through Methodology and Strategy

production (1972) is another extension of the earlier work by Coase.

According to this theory the firm is preferred to the market because of
the benefits of ‘team’ production. A common feature of all these early
theories of the firms is that they provide negative reasons for the existence
of the firm, namely, to overcome ‘inefficiencies’. However, Demsetz
himself in his 1988 article considered the positive function of the firm as
an efficient device for accumulating, storing and using information
(Braendle, n.d.).
From ‘information’ to ‘knowledge’ the journey was not too far. The last
two decades brought forward a knowledge-based theory of the firm as
an alternative view. Knowledge – what is learnt as well as the capacity
to lean more – is seen as the most important resource of a firm. People in
the firm are thus considered as assets, input-providers rather than as
sources of inefficiency. Corporate governance as a research area has been
affected by all of these theories of the firm.
According to Bartlett & Ghoshal (1993), a “managerial theory of the
firm” would be more attuned to the premises of the key actors within the
firm so as to be able to illuminate the corporate world as seen by managers
and encompass the issues that they perceive to be important. The form
of the firm resulting from this managerial theory is a radical departure
from the dominant M-form of the firm. Thus, managerial theory is not
management theory per se. it goes beyond organizational structure of
the firm to its behaviour.
What then is the content of managerial theory? The theory of the firm
consists of a number of economic theories that describe, explain, and
predict the nature of the firm, company, or corporation, including its
existence, behaviour, structure, and relationship to the market. In
simplified terms, the theory of the firm aims to answer these questions:
1. Existence. Why do firms emerge, why are not all transactions in the
economy mediated over the market?
2. Boundaries. Why is the boundary between firms and the market
located exactly there as to size and output variety? Which
transactions are performed internally and which are negotiated on

Vol 10 Issue 2 December, Year 2016 Nitte Management Review

V. Basil Hans 33

the market?
3. Organization. Why are firms structured in such a specific way, for
example as to hierarchy or decentralisation? What is the interplay
of formal and informal relationships?
4. Heterogeneity of firm actions/performances. What drives different
actions and performances of firms?
5. Evidence. What tests are there for respective theories of the firm?

MODERN APPROACH
Traditional managerial models typically assume that managers, instead
of maximising profit, maximise a simple objective utility function (this
may include salary, perks, security, power, prestige) subject to an
arbitrarily given profit constraint (profit satisficing).
The behavioural approach, as developed in particular by Richard Cyert
and James G. March of the Carnegie School places emphasis on
explaining how decisions are taken within the firm, and goes well beyond
neo-classical economics. Much of this depended on Herbert A. Simon’s
work in the 1950s concerning behaviour in situations of uncertainty, which
argued that “people epossess limited cognitive ability and so can exercise
only ‘bounded rationality’ when making decisions in complex, uncertain
situations.”
Ronald Coase, Armen Alchian, and Harold Demsetzs9feel that the firm
emerges because extra output is provided by ‘team’ production, but that
the success of this depends on being able to manage the team and team
production always involves a metering problem – measuring the
contribution made by each participant and matching their reward to their
actual contribution. The metering problem therefore presents a fertile
soil for a form of opportunism known as ‘shirking’.
In a team where each member’s reward is not fully related to their actual
input, the member has too little incentive to contribute fully to the team’s
activities. Corporate governance, in this context, should try to minimise
the scope for shirking by all participants and conserve the gains from
 Role and Responsibilities of Managerial Economists:
34 Empowering Business through Methodology and Strategy

using a firm. The team members are likely to gain more from less shirking
by other team members than they lose from their resulting inability to
shirk (Braendle, n.d.)
Efficiency wage models like that of Shapiro and Stiglitz10suggest wage
rents as an addition to monitoring, since this gives employees an incentive
not to shirk, given a certain probability of detection and the consequence
of being fired.
In 1982 George Akerlof11 developed a gift exchange model of reciprocity,
in which employers offer wages unrelated to variations in output and
above the market level, and workers will have developed a concern for
each other’s welfare, such that all put in effort above the minimum
required, but the more able workers are not rewarded for their extra
productivity. Again, size here depends not on rationality or efficiency
but on social factors.
Recently, Yochai Benk ler also questioned the rigid distinction between
firms and markets based on the increasing salience of “commons-based
peer production” systems such as open source software (e.g. Linux),
Wikipedia, Creative Commons, etc. He put forth this argument in The
Wealth of Networks: How Social Production Transforms Markets and
Freedom (2006).
Modern entrepreneurs/managers of micro, meso and mega companies/
corporations need to look beyond conventional theories and practices to
new areas for firm and functions to be employed ‘strategically’.
Sustainability management and talent management are two such areas.
Sustainability refers to the continued sustenance of business environment
for continued life of an Organization. That includes not only economic
factors, but also welfare or value-based aspects such as ethics of business,
corporate social responsibilities (CSR) etc. Similarly, modern enterprises
look for ‘talent’ in the domain of ‘knowledge’ where talent makes
knowledge useful (Sankaran, 2014).12
Fortunately, newer quantitative measurement methods are also being
developed to support management policies and practices that drive the
growth and development of intangible assets. The central proposition is

Vol 10 Issue 2 December, Year 2016 Nitte Management Review

V. Basil Hans 35

that a valid measurement program will promote increased productivity

through better workflow and accountability (Conway, 2004).However,
one has to be cautious not to equate modern entrepreneurship, razor edge
technology or new talent as “ICT based” only. Several experts in
knowledge management feel that, Internet/intranet along with face-to-
face communication could be the answer.13We are reminded here about
what Nancy Fraser calls “critical communication” not communication
per se, as in the case of Jugan Habermas’s “Theory of Critical
Communication”. This aspect, one must realise given the fact that while
the public sector as a unit in every national economy has been downsized,
(global) public sphere is not like a mute spectator as is evident in India –
networking/digitalisation for good governance (e.g. Aadhar services),
and the newfound love for total quality management (TQM), quality
assurance and quality circles etc., even in government affairs. TQM once
a thought revolution has now become an action revolution. The fear is
about it becoming more and more data-based and very little of value-
based (Hans, 2016). Will Business Ethics address these issues swiftly
and adequately? This is a genuine concern for convergence.
Thus, the modern view is one of convergence – both in thinking and
practice – of business and economics in the dynamic world. We may
now be using new concepts and terminologies such as ‘corporate’ instead
of ‘commercial’ or ‘business’ while referring to firms and their managers
but the fact is that of ‘integration’.14This is a balancing act when we
admit that we are living in a global village. Just like work-life balance,
today’s corporate leaders – even the elder ones – are realizing that the
old world wisdom needs to be balanced with innovative ideas and tools.
Wisdom – which is nobody’s monopoly – and entrepreneurial energy
with technological prowess can together take progress at a steady pace
(“CEOs Raise,” 2014).That managerial asset is no less important than
market advantage has now been proved. Accumulated managerial skills
along with cost effectiveness, firm size, export orientation and sometimes
product differentiation are significant variables explaining the probability
of an Indian enterprise investing abroad. Managerial advantage could be
one of the newer ‘competitive advantages’ for emerging countries’ firms
(Leena &Hans, 2013).
 Role and Responsibilities of Managerial Economists:
36 Empowering Business through Methodology and Strategy

ROLE OF THE MANGERIAL ECONOMIST

Blend of Knowledge and Skills
A managerial economist helps the management by using her analytical
skills and highly developed techniques in solving complex issues of
successful decision-making and future advanced planning, the field of
operation ranging from resource allocation to product pricing; from
project planning to performance budgeting. That truly requires wealth
of knowledge and skills, mostly acquired. Knowledge management (KM)
and skill development (SD) have become the recognized contributors to
business value, and hence the need to identify, and assess both these
resources. It has been noted that “brick and mortar” tangible asset
investments are now growing by only around 31 per cent whereas business
investments in intangible assets are growing by nearly 63 per cent
(Conway 2004). How to blend knowledge and skills for optimizing
business output – is what the managerial economist has to be concerned
with today.
The role of managerial economist can therefore be summarized as
follows:
• Her objectives must coincide with that of the firm – achieving the
goal with conviction and ability
• She must try to make forecasts as accurate as possible – being alert
to the trends and shifts in business activities, and their implications
• She must be able to respond quickly to the needs of the firm, whether
information, market analysis, etc. – being highly professional in
ideas and their execution
• She must perfectly measure the growth of the firm, its sales, profits
etc.
• She must be a proactive member of the business team – ready to
accept newer responsibilities and challenges with utmost care and
seriousness and achieving respectful status in the firm and for the
firm

Vol 10 Issue 2 December, Year 2016 Nitte Management Review

V. Basil Hans 37

Qualities for Empowerment

The duties are advisory, exploratory and even educational. She must be
a good thinker and a practical guide to the businessperson. It is expected
of a managerial economist to possess the ability and skills (especially
analytical skills) to handle all the internal and external issues of the firm
he manages. Her success depends on her ability, personality and capacity.
Smart work is what is needed.
In modern business, especially for big firms, therefore, employment of a
managerial economist has become inevitable. She has to be open for
innovation and imbibing entrepreneurial spirit, come what may. In this
era, we must seize the opportunity for entrepreneurial empowerment.
India has already shown the world that this is possible – through the
enabling mechanism of Self Help Groups (SHGs) for instance.
Particularly, the women enterprises are going beyond family and child
welfare, from reproductive roles to productive roles; and from pappad-
pickle-perfume triangle to techno-training and services, skill textures
and medium and large enterprises, and the motivational spirit of women
entrepreneurs is reinforcing (Hans, n.d; Sowjanya & Hans, 2016.).
Today companies are assessed for empowerment rating too, because
companies come in all kinds.15 Empowering Organizations have clear
methodologies and open-ended strategies. When the team-leader is ready
to empower others it is a sign that she has a strategy – operational and
tactical. Her team serves as a device to implement the strategy. However,
employee or jobsatisfaction alone is not an indicator of empowerment.
Customer-orientation also matters, because managerial economists have
to re-evaluate their marketing approach in the age of the empowered
customer. Also empowerment should not be seen as a substitute for fixing
quality design problems. The best products and services are those that
are done right the first time, and relying on the initiative of workers to
make good on poorly designed products is costly and unlikely to satisfy
customers in the long run. Empowerment in firms tends to focus on
developing a corporate culture and Organizational structure in which
frontline employees eagerly perform their tasks of satisfying the customers
by using their best judgment to tailor-make solutions that satisfy the
 Role and Responsibilities of Managerial Economists:
38 Empowering Business through Methodology and Strategy

customer and are the firm’s best interests. “Inverting the pyramid” is an
expression commonly used to describe the difference between the
empowerment approach and traditional management styles. In a classical
hierarchical Organization, orders flow from the top of the Organization
and are carried out by the people at “the bottom.” They have little
discretion in changing services because the expertise, and therefore
decision-making authority, is considered to reside at the top of the
Organization.In an empowered organization, the hierarchy (often drawn
as a pyramid) has been inverted. Serving customers is considered to be
the most important function in the organization, and the people on the
front line who provide it are considered to be the most important people
(Chand, n.d.). And of course, empowerment comes with some costs,
both implicit and explicit, howsoever high-tech a company might be.
Even ITC and social networking are not without their pitfalls– there can
be High Sociability with Low Solidarity – in a networked Organization.
Carrots are weaker than sticks.

CONCLUSION
This paper discussed the changing roles and responsibilities of business
economists in a dynamic setting. It analysed why and how ‘managing’
business is much more than commercial or even scientific. It is also
‘human’. Therefore, why should only humanities have social objectives?
Why not management science and managerial techniques? Let us be
united in the unity of purpose. More research is needed to assess the
value of fusion or ‘unity’ and to address its related issues and challenges.
The outcome from such exercises will stand in good stead for economics,
management and managerial economists.
As we analyse the business environment both theoretically and
empirically we find that today firms have to more and more factor in
parameters like worker’s reciprocity, cooperation, motives and incentives,
relationship and talent management, common property rights, corporate
social responsibility, e-governance, and the like. Economic theory can
no longer be confined to understanding markets alone; it must study and
predict behaviour of the firms; and move away from decisions in the

Vol 10 Issue 2 December, Year 2016 Nitte Management Review

V. Basil Hans 39

marginalist way to decision by the rule of thumb. This is necessary

because market transactions are getting eliminated and the complicated
market structure with exchange transactions is substituted with the
‘entrepreneur’ who directs production and post-production operations.
In a sense, the system of contracts and relationships become more
important than the allocation of resources. Even the role of the State is
changing on these lines, as for instance the fiscal policy reforms, tending
to increase the size of firm.16This situation may seem counter to the
neoclassical economic theory but real because of the considerable costs
of haggling about division of surplus, particularly due to asymmetric
information and asset specificity. In India as we are in a situation of
rising surplus labour with capital augmentation, these are serious points
to ponder. Economics has grown faster since Smith’s Wealth of Nations.
We are in times of discussing social capital, and privatisation with pubic
partnership. However, firms and markets need not be at loggerheads, if
reciprocity works for efficiency and welfare. The questions as to market
vs. state, market vs. firm, relationship vs. allocation need not be on “either
or” ground. Quality of individuals and institutions are determined not
just by the available talents and skills buy also by the way they are
allocated in economic enterprises. This is a caution for India in its skill
and smart campaigns. How best can we incentivise smart people to engage
more in productive rather than unproductive entrepreneurship is the moot
question.17 More research is needed along these lines. Before concluding,
this paper it may be appropriate to state that Benkler18has rightly
questioned the rigid distinction between firms and markets. From nation’s
wealth to nation’s welfare; and from social welfare to social capital and
social networks, there is now a “Creative Commons” like phenomenon,
globally. This is impacting businesses methodologically, technically and
strategically. With diverse role and responsibilities for the business
economists newer perspectives in management have to be incorporated.
 Role and Responsibilities of Managerial Economists:
40 Empowering Business through Methodology and Strategy

ENDNOTES

1Warren Bennis and James O’Toole in their article in Harvard Business Review, May
2005: ‘How Business Schools Lost their Way’, write that being too focused on
‘scientific’ research the B Schools are hiring professors with limited real-work
experiences, and when applied to business where judgments were made with messy,
incomplete data, statistical and methodological wizardry can blind rather than
illuminate. The problem is not of ‘embracing’ scientific rigour but ‘forsaking’ other
forms of knowledge.

2The Laffer analysis demonstrates both good and bad economic theory. The bad theory
is that inference that because the Laffer effect can occur, it does occur. The good
theory is that we can use simple supply and demand analysis to determine what
magnitudes the elasticity parameters have to be for the Laffer effect to occur.
3For more on methodology in economics see M. Friedman, The Methodology of
Positive Economics. In Essays in Positive Economics, University of Chicago Press,
Chicago, 1962; and M. Blaug, The Methodology of Economics and How Economists
Explain, Cambridge University Press, England, 1980.
4Plan Quality Index (PQI), is an – evaluation (research, consultation and feedback) –
tool developed to measure the quality of coalition plans, suited for community
partnership businesses.

5Frankfurt School – developed in 90s – brought together critical theory and post-
structuralist writings. It has brought into the domain of business management as diverse
areas as psychoanalysis, feminism, queer theory, post13 colonialism, neo-liberal
capitalism, ecology, anarchy, democracy, popular media etc. Critical Theory basically,
is anti-positivistic, considering positivism (fact based) as too narrow, and probes a
range of areas of discourse. Denaturalisation, non-performativity, critical
performativity and reflexivity are the key features of CMS (critical management
studies).
6Before the 1930s firm was considered as a “black box|” which was assumed to behave
like any other Smithian selfinterested utility maximising economic actor. Coase was
one of the first scholars who asked why firms exist and what precisely a firm was.
Today both questions are fundamental to understand corporate governance. For details
see Ronald Coase, “The Nature of the Firm”, Economica, 4, 1937:386-405.
7Oliver Hart, Firms, Contracts, and Financial Structures, Oxford University Press,
1995.
8Nobel laureate economist Oliver Eaton Williamson (b. 1932) of the New Institutional
School, identified factors for the optimal choice of governance structure. He presented
the firm and instant market transactions as lying on a spectrum of forms of organisations
(“governance structures”) rather than as simple alternatives. Williamson has been

Vol 10 Issue 2 December, Year 2016 Nitte Management Review

V. Basil Hans 41

influential in the 1980s and 1990s debates on the boundaries between the public and
private sectors.

9See R.H. Coase, “The Nature of the Firm”, Economica, 4 (16), 1937:386–405.
doi:10.1111/j.1468- 0335.1937.tb00002.x; and A.A. Alchian; &H. Demsetz, 1972.
“Production, Information Costs, and Economic Organization”, The American
Economic Review, 62 (5), 777-795. JSTOR 1815199.
10Shapiro-Stiglitz efficiency wage model provides a technical description of why wages
are unlikely to fall and how involuntary unemployment appears. For details see C.
Shapiro & J.E. Stiglitz, “Equilibrium Unemployment as a Worker Discipline Device”,
The American Economic Review, 74(3), 1984: 433-444.

11See G. Akerlof, “Labor contracts as partial gift-exchange”, Quarterly Journal of

Economics, 1982: 97 (4), 543-569; and G. Akerlof, & J. Yellen, “The fair wage-
effort hypothesis and unemployment”, Quarterly Journal of Economics,105 (2), 1990:
255-283.
12Michael Polanyi, for instance makes a distinction between knowledge and knowing.
While knowledge is static, knowing is dynamic. ‘Knowing’ when marshalled to create
desired human behaviour creates strategic asset for the organisation. Central to Michael
Polanyi’s thinking was the belief that creative acts (especially acts of discovery) are
shot-through or charged with strong personal feelings and commitments (hence the
title of his most famous work Personal Knowledge). Arguing against the then dominant
position that science was somehow value-free, Michael Polanyi sought to bring into
creative tension a concern with reasoned and critical interrogation with other, more
‘tacit’, forms of knowing. For more information on this see S. Conway, Valuing
Knowledge Management Behaviours: Linking KM Behaviours to Strategic Measures.
InC. W. Holsapple (Ed.), Handbook of Knowledge Management, Volume 1,Knowledge
Matters (pp. 461-475), International Springer Group, New Delhi, 2004.
13See for experts’’ views, Jacky Swan, Sue Newell, Harry Scarbrough, &Donald
Hislop, 1999: 262 – 275.
14The famous CSR DNA 2.0 model incorporates value creation, good governance,
social contribution and environmental integration. For details see Rassindren &Hans
(2015).

15 See Annexure to this Article.

16The old discussion about “Market or State” is obsolete. There will always have to
be a mix of market and state. The only relevant question is what that mix should look
like. How far do we have to let the market go its own way in order to create as much
welfare possible for everyone? What is the responsibility of the government in creating
welfare? These are difficult questions. In India for instance, there is the objective of
“minimum government, and maximum governance”. Will this lead to more and more
‘empowering’ business outside the government sphere? Will less quantity (downsizing)
 Role and Responsibilities of Managerial Economists:
42 Empowering Business through Methodology and Strategy

mean more quality? Will there be more room for total quality management in the new
dynamics of business management in the country? Time will tell. See V. B. Hans,
“State and the Market – Debate and Developments”. Working Paper, 2014. Available
at SSRN: https://ssrn.com/abstract=2373827 or
http://dx.doi.org/10.2139/ssrn.2373827. An interesting recent work in this area is The
Limits of the Market: The Pendulum between Government and Market by Paul De
Grauwe, Oxford, 2017.

17See Perumal, p. 9.
See Y. Benkler, The Wealth of Networks: How Social Production Transforms
18
Markets, Yale University Press, New Haven, 2006.

REFERENCES
Bartlett, C.A. & Ghoshal, S. 1993. Beyond the M-form: Toward a managerial theory of the firm.Strategic
Management Journal, 14 Winter Special Issue, 23-46.
Benkler, Y. (2006). The Wealth of Networks: How Social Production Transforms Markets and Freedom.New
Haven: Yale University Press.
Braendle, Udo C. (n.d.).Theories of the firm. Accessed on April 21, 2017 from http://bwl.univie.ac.at/
fileadmin/user_upload/lehrstuhl_ind_en_uw/lehre/ss08/CSR/lecture_CSR08_article_
braendle_ToF.pdf
CEOs Raise a Toast to Millennial Power. (2014, June 18). The Economic Times, p. 10.
Chand, S. (n.d.).Empowerment of Employees: The Basic, Benefits and Costs of Empowerment of Employ-
ees. Retrieved on 18/5/2017 from http://www.yourarticlelibrary.com
Conway, S. (2004). Valuing knowledge management behaviours: linking KM behaviours to strategic per-
formance measures. In Handbook on Knowledge Management 1 (pp. 461-475). Berlin, Heidel-
berg: Springer.
Hans, V.B. (2011, April). Research in Commerce and Economics: Fertility from Fusion?Paper presented at
the UGC Sponsored National Seminar on Research in Commerce and Management, Mangaluru:
St Aloysius College (Autonomous).
Hans, V.B. (2016). TQM – a quality revolution. In Management Perspectives on Changing Socio-Eco-
nomic Environment: Vision & Challenges (pp. 101-106). Conference Proceedings, Baramati: Anket
Institute of Management Studies.
Hans, V.B. (2017). Nobel Honour for Contract Theory, Amartya Bulletin, pp. 58-60.
Hans, V.B. (n.d.). Self Help Groups and Women Entrepreneurship Development in Karnataka. Working
Paper.
Hans, V. B., & Jayasheela (2013, January 10). Mechanism Design: Synthesizing Incentives, Institutions
and Information. In Jayasheela, et.al. (Eds.), Proceedings of the Workshop on Relevance of Mecha-
nism Design and Game Theory in Modern Economic Analysis (pp. 27-39). Bengaluru: Karnataka
State Higher Education Council, Government of Karnataka.

Vol 10 Issue 2 December, Year 2016 Nitte Management Review

V. Basil Hans 43

Krishna, K.M. (2014). Corporate Governance in Family Owned Business to Compete with Global Compa-
nies – A Case of Semiconductor Industry.Pratibimba, 14(1), 55-65.
Leena, N., & Hans, V.B. (2013). India’s Outward Foreign Direct Investment – Charting New
Courses.Academic Studies National Journal of Jyoti Research Academy, 7(2), 68-75.
Perumal, P. (2017, May 16). “When being clever isn’t enough”.The Hindu, p. 9.
Rassindren, M.J.G., & Hans, V.B. (2015). Corporate Social Responsibility – An Evolutionary Outline from
an Economic Perspective.Nitte Management Review, 9(2), 54-69.
Sankaran, K. (2014). Sustainability and Talent Management: Two Important Emerging Areas of Strategic
Management.Nitte Management Review, 8(1), 23-31.
Salvatore, D. (2012). Managerial Economics: Principles and Worldwide Applications. Seventh Edition,
Adapted Version (Ravikesh Srivastava), New Delhi: Oxford University Press.
Sowjanya, S.S. & Hans, V.B. (2016). Developing Women Entrepreneurship in India: Issues and Chal-
lenges. In C.N. Rao and D. Banerjee (Eds.), Strategies for Overcoming Contemporary Manage-
ment Challenges (pp.25-30), Nagarcoil: B-Digest Publications.
Steiner, J.F., & Steiner, G.A. (2012).Business, Government, and Society – A Managerial Perspective, Text
and Cases. Twelfth Edition, New Delhi: McGraw Hill Education (India) Private Limited.
Swan, J., Newell, S., Scarbrough, H., &Hislop, D. (1999).Knowledge management and innovation: net-
works and networking.Journal of Knowledge Management, 3(4), 262-275.
Weihrich, H., Cannice, M.V., & Koontz, H. (2010). Management – A Global and Entrepreneurial Perspec-
tive. Thirteenth Edition, New Delhi: Tata McGraw hill Education Private Limited.

ANNEXURE 1
• Many countries have their own company assessing indices. For instance in South Africa the ‘Intellidex’
and ‘Empowerdex’ show the overall ranking of SA’s listed companies.
• 2015: In a survey conducted by Great Place to Work Institute and The Economic Times, seven
hundred companies across 20 sectors were surveyed. Google, the all-time favourite best employer
has been toppled by a lesser known (IT) company called RMSI. It’s speciality? Says, Gagan Jyot,
vice president, Human Resources, RMSI, “People are respected and valued, performance is nur-
tured, creativity and excellence are encouraged, leadership and teamwork are rewarded. The man-
agement team is simple, honest and highly approachable, which makes it easy for people to work
together as one team and focus on the business and clients.”Marriott Hotels India ranked 3rd and
American Express India, 4th.
• 2016: Google India, American Express India, Ujjivan Financial Services, Teleperformance India,
Godrej Consumer Products, and Marriott Hotels India rank 1 to 6 among the 10 best Indian Compa-
nies to work for.
• What’s the reason for the unparalleled success that keeps Amazon growing while so many tradi-
tional retailers are shutting their doors? What is clearly visible is the paradigm shift that is getting
started (?!). The key lessons from the Amazon model are – (i) It’s not the product; it’s the experience,
(ii) Annihilating the competition with customer service., (iii) Fulfilment lies in not concentrating
typically in major metropolitan areas with a large population, and (iv) Be unstoppable with ‘change’;
don’t consider any boundaries as insurmountable.
• Doing business with knowledge and skill of behavioural economics can be a rewarding experience
for most firms and governments today. There is some on-going research on how behaviour econom-
ics could solve the woes of social sector spending (e.g. insurance, education etc.)